Roblox, the children’s games app that grew in popularity during the pandemic, soared on its market debut on the New York Stock Exchange on Wednesday. The company’s stock closed at $ 69.50 each, giving the company a market value of $ 38.26 billion.
Roblox went public through a direct listing, following the example of other technology companies, including Spotify, Slack and Palantir. Instead of raising new capital in exchange for new shares, Roblox allowed existing shareholders to sell immediately, without being subject to a blackout period.
The shares started trading at $ 64.50, which represented a 43% increase over a private financing round in January, when the company sold shares for $ 45. The NYSE set a reference price at $ 45 Tuesday, although no stock has changed hands at these levels. The reference price tends to reflect private market negotiations and does not indicate where a stock will be opened.
Based on a fully diluted share count of 652 million, which includes units of restricted shares that will be converted into common shares, the company was worth $ 45.3 billion from its closing price.
Roblox hits the market out of an explosive year of growth, especially for children who were stuck at home because Covid-19 forced the closure of schools and sports leagues. Within Roblox, which is one of the highest grossing apps on Apple and Google devices, users create avatars that can move among the millions of games on the service, browsing theme parks, adopting virtual pets and fighting enemies with their friends .
Last year’s revenue jumped 82% to $ 923.9 million. Still, Roblox’s net loss increased to $ 253.3 million, from $ 71 million in 2019, when the company nearly tripled the amount of money it paid developers through its revenue-sharing program. More than 1,250 developers earned at least $ 10,000 last year from virtual sales of their Roblox games.
The New York Stock Exchange welcomes Roblox executives and guests (NYSE: RBLX) today, Wednesday, March 10, 2021, in celebration of its Direct Listing.
NYSE
Roblox planned to go public last year through a traditional IPO. The company postponed its offer after Airbnb and DoorDash debuted and underestimated their shares, leading to a huge discount for new investors. Roblox chose to follow the direct listing route and raised a smaller round of financing in January to minimize dilution.
The company then postponed its debut again last month and reaffirmed its finances after the SEC examined the way it recognizes revenue from sales of Robux, its digital currency.
Roblox is a particularly difficult company to evaluate because there is no way of saying what will happen when schools reopen and children return to playing with their real-life friends. The company has added content for older audiences, such as virtual shows, meetings and educational experiences, but it still depends mainly on children using their parents’ money.
“Roblox has been growing for 15 years, driven by our community, driven by incredible content, driven by our creators and driven by our ability for people to do things together. This is a long-term growth path and we believe it continues for the ahead, even after Covid, “Roblox CEO David Baszucki told CNBC’s” Squawk Box “on Wednesday.
Roblox is forecasting rapid growth in 2021, albeit at a much slower pace than last year. Revenue is expected to rise between 56% and 64%, to between $ 1.44 billion and $ 1.52 billion, the company said last week. This suggests a higher revenue per user, because the company sees the number of daily active users increasing only from 6% to 12%, while the total hours of engagement should be practically stable.
“We entered 2020 with strong organic growth, which was further supported by restrictions on social distance,” said Michael Guthrie, chief financial officer at Roblox, in the guidance statement. “As these restrictions ease, we expect growth rates in 2021 to be well below rates in 2020, however, we believe we will see absolute growth in most of our key metrics for the entire year.”
At his opening price on Wednesday, Roblox is valued at about 29 times revenue for 2021, based on the midpoint of his guidance. This is slightly above software developer Unity, which is valued at about 27 times future sales, and significantly higher than game companies like Zynga, Electronic Arts and Playtika, which have multiples in a single digit.
Correction: This story has been updated to reflect that Roblox had a market value of $ 35.5 billion at its opening price of $ 64.50.
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